Q: Who would benefit most from a tax rewrite?
A: There are three main ways companies could benefit from tax reform.
If the corporate tax rate is reduced, it could benefit companies that currently pay high effective tax rates. For example, Southwest Airlines generates most of its sales inside the U. S. and pays a 38% effective tax rate. CVS Health pays an effective tax rate of 39%. If the federal tax rate were to be reduced from 35% to 20% as is being proposed, these compa- nies could be big winners.
Another possible benefit is from the proposed repatriation tax break. It currently costs businesses 35% to bring foreign profits back home, and a temporarily low repatriation rate of 10% or so could be part of a tax reform package. This would help companies such as Apple and Microsoft, which have nearly $ 400 billion in overseas cash between the two.